STOCK MARKET RECAP AUGUST 2025

The stock market has continued its steady climb since the lows reached on April 8^th at the depths of the tariff concerns.  The S&P 500 has risen 30% since the low point in April and has climbed about 3% over the last month.  Both the S&P 500 and the Nasdaq are now up about 10% year-to-date.

In the chart below you can see the extreme price volatility in April and the steady move higher over the last three months.

Economic news has been mixed over the last month. Corporate earnings have mostly exceeded expectations for the most recent quarter.  Inflation ticked up slightly in July due to the tariffs.  Jobs numbers have been weak lately. But the Fed has indicated that it will begin lowering interest rates in September. 

It was a wild ride to nowhere in March, April and May. Discipline and patience paid off over the last six months.  Following a disciplined system in times of volatility always produces better results than letting emotions drive your investing decisions. 

The biggest cloud that I see hanging over the stock market currently is valuation levels.  My valuation gauge indicates that the stock market (S&P 500) is now 21% above its fair market value in late August.  This is higher than we were in January 2022. The last time the market was overvalued by this much was in 2000 during the dot-com bubble. 

I do not trade based on market valuation levels and you should not either.  It is just a reminder that you need a strategy in place to protect your savings in case we experience a bear market. Older investors in particular need loss protection.

Stay Disciplined My Friends,

Phil

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